Chrysler threatens to take its jobs and go home

Chrysler LLC threatened last night to pull the company's production out of Canada – a move that would throw 9,000 employees out of work – unless governments here provide $2.3-billion (U.S.) in loans and its Canadian union agrees to slash labour costs by 25 per cent.

At a parliamentary committee hearing last night, Chrysler president Thomas LaSorda said the company would commit to maintaining roughly a quarter of its North American production in Canada if its “needs” are met.

Sure sounds like it. I suspect the feds will argue Canada needs to maintain an auto industry in this country (including Chrysler and GM) and keep all those jobs here, because as mentioned in the other thread, if one company falls, then a lot of small parts suppliers will follow, and as Toyota argues, they will be unable to survive the ripple effect of losing small parts suppliers and other industries that rely on all of the auto companies remaining intact. I think the feds will cave in to GM and Chrysler. Do they have a choice?

And do what with them? They can't make it on their own so I guess you can dump a few billion in cash into the hopper to keep them running for a while but that doesn't solve the problem.

Exactly!!

I've noted for weeks that Canada could buy all of the stock of GM or Ford (or the ownership interest in Chyrsler) for a song. For a mere investment of about $35 per Canadian citizen, the Canadian government could purchase 100% of the stock of GM. In fact, the Canadian government could purchaes a majority (controlling) interest in GM for much less than that (and the same is roughly true of Ford and Chrysler).

If Canada owned GM (or Ford or Chysler), Canada could do whatever it wanted with the company, such as only produce "green" or small cars or stop producing cars entirely and move production to mass transit.

The problem you would find, though, is that the Canadian taxpayers would have to pour tens of billions of more dollars (at least) into the enterprise to keep it running. The question would be: Would that be a good use of limited financial resources?

If Canada owned GM (or Ford or Chysler), Canada could do whatever it wanted with the company, such as only produce "green" or small cars or stop producing cars entirely and move production to mass transit.

I think that's a great idea, and maybe someone should take this up with our political parties - quickly!

Yeah, there'd be problems and roadblocks in the way, but I think the pros could outweigh the cons. Probably could be years away, if ever, though.

With what money? We'd have to spend additional billions of dollars doing so, and I really can't see that going over well with the country as a whole when all the auto plants are in Ontario.

Why couldn't the feds insist on outsourcing for component parts from all regions of the country?

Among other things that would require additional billions of dollars of investment in parts manufacturers accross the country. And it's likely the gov't would end up subsidizing those operations for years to come.

As has been pointed out on the GM thread, while the company could be purchased for a relatively small amount keeping it operating would require double digit billions of subsidies to keep it operating while paying for its retirement programs. And that still wouldn't eliminate the need to cut a very large percentage of the existing employees.

And it's great to talk about creating a green transportation industry but that would require additional billions in R&D costs let alone retooling of the auto plants. End result is that some years and a few billion dollars from now you might start producing the sort of vehicle you want and, if you're real lucky, some years after that you'd be selling enough vehicles to start to pay the bills.

No, Boom Boom, we can't handle any of those challenges. Only private enterprise has the capital, the foresight, the dynamism, the inventiveness, and the capacity for risk required. We should just specialize in what we're good at - bailing them out.

Unionist, hate to tell you but there is no way that a government can take these things over and make a go of it without dumping many billions of dollars into the respective black holes.

So the choice with GM and Chrysler at least seems simple - (i) let them go now or (ii) pour a few billion dollars into them and then let them go.

What could be accomplished by starting from scratch is a different question (even then you're looking at a few bill for startup costs and no guarantee that you'll ever have a viable entity - you're still better off letting private capital do it - that way, as long as there are no misguided attempts to bail them out, it's their money, not the taxpayers')

you're still better off letting private capital do it - that way, as long as there are no misguided attempts to bail them out, it's their money, not the taxpayers')

Yeah, why is everyone worried about industries shutting down? It's just the owners' money going down the drain. We should be celebrating that those big capitalists are going to be poor like the rest of us!

If worse comes to worse (unlikely) and Chrysler moves its production capability out of Canada and into the US, I predict there'll be a lot of pissed off people demanding that the company be banned from selling their US-made vehicles here ever again.

you're still better off letting private capital do it - that way, as long as there are no misguided attempts to bail them out, it's their money, not the taxpayers')

Yeah, why is everyone worried about industries shutting down? It's just the owners' money going down the drain. We should be celebrating that those big capitalists are going to be poor like the rest of us!

Thanks for providing that much-needed perspective to the debate.

Which is exactly why the government shouldn't be trying to bail them out.

But even if you could you'd still have to invest billions to try to develop something that people would buy (assuming they will ever buy it). And that's after you walked on retirement benefits and whacked the majority of the workforce.

We're talking about spending $2.3 billion to save 9,000 jobs. That comes to $255K per job. It seems to me that, rather than spend $255K to save these jobs, the government could spend the money giving each worker a decent severance package (say, a year's salary) and training programs for new jobs.

You are. It's about spinoff, supply, tax base, parts production, exports... And you think paying workers to be idle is equivalent to paying them for productive labour? Sort of like paying farmers not to grow wheat?

What discipline did you say you professed in?

In any event, I like the direction of this thread. For threatening and blackmailing the Canadian government and people, Chrysler's assets in Canada should simply be placed in "trusteeship", without compensation until they become profitable enough to pay off some fair part of the worth. Then we can decide what to do with it in the service of the Canadian people.

As for the workers: I'm not advising paying them to be idle, but to retrain. Maybe severance was too quick: how about paying them to retrain?

As for parts production: are you talking about Chrysler's parts production or other companies producing, in Canada, parts for Chrysler? If the former, then that would account for those 9000 jobs. If the latter, couldn't those companies continue to supply parts for Chrysler? Or is Chrysler also threatening to cease buying parts built, by other companies, in Canada?

(What discipline I am in seems to me irrelevant to this discussion, where I am simply asking honest questions, and making surely fallible proposals. I am quite happy to be shown why such a proposal wouldn't work.)

Sorry, torontoprof, I shouldn't have answered in the tone that I did. But I honestly think it's premature to have any sober discussion about bailing out Chrysler. Until LaSorda remembers where he comes from, and until he grows a civil and respectful tongue in his head, the Canadian government and public as a whole should tell him to stuff his pathetic little car company up his anus. Once he has accomplished that gymnastic feat, we can get down to some serious expropriation.

"What could be accomplished by starting from scratch is a different question (even then you're looking at a few bill for startup costs and no guarantee that you'll ever have a viable entity - you're still better off letting private capital do it - that way, as long as there are no misguided attempts to bail them out, it's their money, not the taxpayers')"

-------------------------------------------------------

We really must go back to thinking of ourselves as citizens, not consumers and taxpayers, ab.

As for the workers: I'm not advising paying them to be idle, but to retrain. Maybe severance was too quick: how about paying them to retrain?

Retraining is such horseshit. At any given time I have about thirty former assembly worker / labourer clients attempting to retrain -- big long programs including GED's, college diplomas, all necessary equipment, private tutors, the whole ball of wax -- and of that number I would say less than 20 percent actually manage to complete the program and find work in their new field. Almost always it's the youngest ones who are successful. For anyone over say 40 - 45 years of age with a labourer background, they're either going back to work as a labourer, for a third of their former wages, if they're lucky enough to find that kind of job outside of a temp agency, or they're joining the ranks of the unemployed. A few end up working part-time for big box stores.

My clients have work injuries but that's not their main problem in entering a new field. The vast majority of the time they can't even attract an interview.

Retraining might work better if the jobs were actually there to be filled.

Retraining might work better if the jobs were actually there to be filled.

Retraining should be intelligent, ie someone has done research to get a reasonably good idea which jobs are likely to require workers at the end of any retraining period. If those 9,000 Chrysler jobs were to suddenly disappear overnight, I like the earlier reference to Danny Williams - seize the companies assets and make a determination as to where to go from here - whether liquidation of the assets to be put into a fund for the laid off workers, to be used as they see fit; or sell the assets to another car company (Fiat?) to get new automotive production started up, or use the assets and facilities to re-tool for a different industry such as green technology, whether green vehicles or something else entirely.

There's no shortage of ideas out there, just has to be some determination that this country will not allow itself to be fucked over by Chrysler.

The auto industry will go the way of the cod fishery and that is long overdue.

Instead of bailing them out invest public money into designing the cars these fuckers should have had rolling off assembly lines twenty years ago instead of their bloated fat-pig planet-destroying SUVs.

Let 'em sink, hopefully without trace. And the workers too, oh, boo hoo. They're as complicit as the management, taking a good wage to build this unconscionable crap. Fuck'em all. Dustbin of history and all that.

They aren't value added personel, and are just a drain on company resources.

And, if we had vertibrates instead of politicians, someone would have told Guillotine Fodder Lasorda that what he doesn't build here, he can't sell here--and to do something to himself and the horse he rode in on.

There's a much bigger issue at stake here. Canada is fast approaching becoming a net importer of food, and a nation losing the ability to make stuff.

The people who have been charting this economic course for Canada are too well educated to take shelter under the umbrella of incompetence.

And, if we had vertibrates instead of politicians, someone would have told Guillotine Fodder Lasorda that what he doesn't build here, he can't sell here--and to do something to himself and the horse he rode in on.

This crisis among the rich and idle classes is the greatest opportunity to take back our country we've had since C.D Howe sold us down the river after the war.

Not only could we nationalize bloated dinosaurs like Chrysler and GM and turn them into responsible organizations that make useful products, we could jail the bloated, irresponisble predators who managed these companies and whose greed and sloth created this financial mess over the last 20 years.

Sven, in case you missed it, the owners of a private company put in those kinds of startup expenses when they expect to... wait for it

make a profit

Are you denying that the Canadian government, in taking ownership of the auto companies instead of bailing them out, would be unable to retool these companies to reposition them for far more environmentally-sensitive vehicles that would...

sell well and make them a profit?

Or is it just that you believe that there is something inherently magical about private ownership?

Hint: If the Canadian government could make a profit off selling cars the Canadian people want, you might not have to pay as much in taxes.

DrC, Nothing magical about private ownership. But do you actually believe that the government can take over the manufacturer and make it work WITHOUT walking on many billions of dollars of retirement benfits and WITHOUT eliminating a very large percentage of the existing employees? Or is the intent for the government to continue pouring cash into a bottomless pit?

We're talking about spending $2.3 billion to save 9,000 jobs. That comes to $255K per job. It seems to me that, rather than spend $255K to save these jobs, the government could spend the money giving each worker a decent severance package (say, a year's salary) and training programs for new jobs.

triciamarie wrote:

torontoprofessor wrote:

As for the workers: I'm not advising paying them to be idle, but to retrain. Maybe severance was too quick: how about paying them to retrain?

Retraining is such horseshit.

Boom Boom wrote:

Retraining should be intelligent, ie someone has done research to get a reasonably good idea which jobs are likely to require workers at the end of any retraining period.

There has been a pretty good series of articles in the Toronto Star lately about problems with the WSIB's retraining program. The Board's response is that the issues identified in the articles are isolated occurrences. That is a baldfaced lie. This kind of problem is endemic in their labour market reentry program. But I have also seen exactly the same problems with retraining programs offered by other agencies including EI and the Ontario Disability Support Program. CPP disability has a program like this too, and inevitably, the overarching goal is NOT to place the recipient in a position where they are actually employed, or even employable, in a new field. Rather, the goal is to reduce or terminate the recipient's eligibility for ongoing benefits.

It is suggested that for $255K, Chrysler workers could all be retrained. $255K won't buy you much of a retraining program -- certainly nowhere near enough to even theoretically replace a $25 - $30 wage. To replace that kind of money, even after say five years experience in a new field, workers would probably need a degree, a good diploma, or a ticket in a trade.

If you want these workers to actually succeed in these programs and become employable in those trades, that means in many cases, making sure their English is up to par -- a three, six, nine or twelve month intensive program. Then you send them back to high school -- a much more adequate foundation for college than the two or six or nine month GED programs normally substituted.

Assuming that they manage to benefit from the initial upgrading program -- a big assumption, often not met -- now they start college. Inevitably, the employment goal was chosen at the outset of the program by looking into someone's crystal ball of the labour market. So by the time the upgrading portion is completed, now that decision is already stale by however many months or years. I had a worker commence a computer network technician program that seemed somewhat reasonable at the time (if you disregard how unlikely it is that an older person will find work in a computer field), but two months into his two-year program, Nortel collapsed and flooded the market with network engineers. Think there was any way to turn that worker's ship around? Nope.

And frankly, it is very, very difficult to go back to college or university, or maybe go to school for the first time at that level, at an older age, when learning is more difficult, and with all the competing responsibilities you have accumulated by that point. Some of them do succeed and that is great. But many of those workers are not going to make it through no matter what supports you try to put into place for them.

Say they do get through the program. Now you give them job search training and support for three or six months. Do they get the job? Well, these candidates are minimum ten years and often twenty or thirty years older than most of their classmates, competing for the same jobs. There are probably other candidates with not just education but actual work experience in the field. For employers in this market, with many more qualified applicants than they have jobs to fill, who do you think they are going to choose -- the unencumbered kid fresh out of school who can be moulded and trained pretty easily; the candidate with prior proven experience; or the ex-assembly worker with a history of layoff from CAW L.444 Chrysler, who probably has a family and maybe some work injuries to boot?

Some of the trades programs are short academic sessions followed by long apprenticeships. There you are relying on private employers to agree to sponsor the apprentice, with all the associated costs. Those employers are looking usually at young people and people who are recommended to them or who they already know, not someone coming out of a government program with maybe a sense of entitlement and strings attached and big question marks over their future.

People like the idea of retraining because it fits into the pull yourself up by your bootstraps, anyone can do anything American dream. But the reality in my experience is very different. Some workers do benefit and they are the believers and the success stories. More workers fall off the edge, and end up blaming themselves.

This is a bit of drift, coming as it does from a feverish brain - I have a really bad cold right now, so I apologize if this sounds like gibberish.

I hate Chrysler products - as far as I'm concerned the company hasn't manufactured anything halfway decent (with the exception of their minivans, but even those have become bloated monstrosities) in quite a while. I'd hate to suddenly see 9,000 Chrysler Canada employees laid off, but there has to be a way to get them reintegrated into the workforce if the company leaves of its own accord or collapses entirely. I hope the feds have the guts to ban their products from crossing back across the border if they move operations south, though.

I also don't care for GM much. Of the Big Three, Ford is the only one that makes products I'm actually interested in - I think their small cars, some built with their Mazda partnership - are quite good. GM used to have a Toyota partnership - what happened there? Is it still alive, or has Toyota moved on?

triciamarie - I do have a question after reading your very excellent post: if retraining is so useless, what would you then suggest? (and I apologise for putting you on the spot, but I'm interested in your opinion)